Better way to shop for insurance?

Rhode Island took the first step in its goal to make health-insurance costs and services more transparent with the Aug. 20 release of data on plans that will be offered through the state’s new insurance marketplace, HealthSourceRI.
The biggest advantage of the new exchange, said HealthSourceRI Executive Director Christine Ferguson, will be the introduction of “Full Employee Choice.” The service will enable employers to select the contribution level that best fits the budget, and employees to select the plan that best meets their needs. Under the plan, the employer writes one check, and the employees will have access to seven-day-a-week support, removing health insurance as a human resource concern for a small business.
“The bet is that people in Rhode Island are not stupid,” said Ferguson, and they will be able to figure out the best package when looking at prices for health insurance. Two large, detailed charts that will be made available to the public will identify premiums, deductibles, services, copays and co-insurance for services and maximum out-of-pocket expenses for the available plans.
Blue Cross & Blue Shield of Rhode Island, the state’s largest health insurer, said the level of detail and the side-by-side comparisons will be helpful to consumers in making good choices when the new marketplace opens for business on Oct. 1.
“We understand that health insurance is confusing and that everyone has different health care needs, which is why we fully support giving consumers the information they need to make these important decisions,” said Stacy Paterno, Blue Cross spokeswoman.
Blue Cross is offering 10 of the 12 plans in the individual and family market and nine of the 16 plans for small businesses with fewer than 50 employees. The health insurer is also undertaking its own outreach and education campaign, hosting meetings for employers as well as individuals, offering to share HealthSourceRI materials at those sessions.
The release of the new health-insurance product line also marks the entrance of Neighborhood Health Plan of Rhode Island into the state’s commercial insurance market, offering two plans as part of the individual and family marketplace and two plans for small-business employees. The plans will be available to Rhode Islanders whose yearly income is below 250 percent of the federal poverty level – $28,275 for individuals and $48,825 for a family of four. “Neighborhood and its staff are excited to be part of this historic effort to make the Affordable Care Act work in Rhode Island,” said Tom Boucher, spokesman for Neighborhood.
Boucher anticipates between 6,000 and 7,000 new members will join Neighborhood through the new marketplace by Dec. 31, 2014. “We will be the only plan that offers families with low-to-moderate income health coverage for children through RIte Care and adults through HealthSourceRI,” he said. “We think having coverage from one company will be important to families and help drive enrollment.”
Ferguson said that briefings are planned with insurance brokers. “About 80 percent of the small-business market in Rhode Island is controlled by about 18 brokers,” Ferguson said.
“Small-business participation is absolutely essential,” she said. “If employers see the value of this, I think you’ll see faster changes in the health care system.”
Ferguson’s expectation is that there will be more innovative products on the market in the second year of operation beginning Jan. 1, 2015, including Tufts Health Plan and a number of network plans that include hospitals, insurers and group medical practices.
In terms of numbers, Ferguson defined the small-business marketplace as having about 157,000 employees in firms with fewer than 50 workers. Using a 1.9 multiplier for family members, the total market is about 300,000, she said.
An estimated 70,000 to 100,000 Rhode Islanders will buy health insurance on the new market by the end of December 2014, according to Ian Lang, spokesman for HealthSourceRI.
Among documents HealthSourceRI will make available to consumers are charts that detail the breakdown of monthly premiums by age, from 21 to 64 – reflecting how insurance companies measure risk and its relationship to age.
For example, in premiums, the most-expensive “platinum” plan of the 16 plans offered on the exchange will cost a 21-year-old employee of a small business $378 a month, or $4,536 a year, not including employer contributions or tax credits. Similarly, in premiums, the least-expensive plan “bronze” plan will cost $187 a month, or $2,244 a year, for a 21-year-old.
The most-expensive “platinum” plan will cost a 61-year-old $1,061 a month, or $12,732 a year, not including employer contributions or tax credits. The least-expensive “bronze” plan will cost a 61-year-old $525 a month or $6,300 a year. The most-expensive platinum plan has deductibles of $250 for an individual and $500 for a family, with maximum yearly out-of-pocket expenses of $1,250 for an individual and $2,500 for a family. The least-expensive bronze plan for premiums has deductibles of $5,000 for individuals and $10,000 for families, with a maximum yearly out-of-pocket expenses of $6,350 for individuals and $12,700 for families.
For that reason, the most-expensive plan by premium may not turn out to be the highest-cost plan.
Adding up the total costs (assuming that all the maximum out-of-pocket expenses are met) for premium, deductibles, copays and coinsurance, the total cost of the most-expensive platinum plan for a 21-year-old would be $5,786 a year. The total cost of the least-expensive “bronze” plan for a 21-year-old would be $8,894 a year.
Similarly, the total cost for the most-expensive (by monthly premium) platinum plan for a 61-year-old could be $13,982 a year, while the least-expensive plan for a 61-year-old could cost a total of $12,650
Two factors may reduce those amounts. Employer contributions for companies who buy insurance through the exchange, which will be at least 50 percent of the premium cost (and in some cases more), would reduce the most-expensive plan for a 21-year-old by $2,536, making the total potential cost of health insurance $3,786 a year. A 50 percent reduction in the premium cost of the least-expensive plan would save $1,122, making the total potential cost $7,472.
For a 61-year-old, the employer contribution at 50 percent would reduce the most-expensive plan’s premium cost by $6,366, making the total potential cost $8,866. The 50 percent employer contribution would reduce the least-expensive plans’ premium cost for a 61-year-old by $3,150, making the overall total potential cost $9,500.
In addition, there may be further reductions through tax credits for those people who are making less than 400 percent of the federal poverty line – $45,960 for an individual and $94,200 for a family of four. Those tax credits will be immediately applied to the purchase of health insurance. •

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